Japanese government promotes collusion

In the usual spectrum auction, collusion is strictly prohibited. But Japanese government (MIC) promotes collusion. This is a tradition in Japan, called kansei dango (government-made collusion).

In the 1950s, when many companies applied for the TV licenses, Kakuei Tanaka, a powerful politician, made the rule that gives the license to the applicant if many companies collude to one. Since then, collusion (ipponka) has been the official rule of the MIC.

But Softbank cried foul when MIC tried to give the licenses of 2.5GHz band to two companies they selected last year. So MIC reluctantly held a beauty contest in public for the first time in the Japanese history.

The result, however, was surprising. MIC selected KDDI that would use Mobile WiMAX as expected, but another was Willcom, whose technology "Next-generation PHS" was not deployed in any country. Moreover, its main shareholder is Carlyle Group, whose subsidiary went bankruptcy in the subprime turmoil.

Even worse, MIC held kansei dango in the VHF and UHF band. An expert said that there was an implicit contract that MIC would give VHF band to broadcasters and UHF to telecom carriers. And the technology that would be adopted in the VHF band is ISDB-T, which is adopted only in Japan and Brazil. Many experts are worried that MIC would repeat the fiasco of PDC, developed by NTT and enforced by MIC, which isolated Japanese mobile operators and manufacturers in the global market.

Technologically, the collusion makes no sense because some semiconductor makers implement DVB (international de facto standard), MediaFLO (adopted in the U.S.), and ISDB-T in one chip. Why is MIC selecting technology when all of them can be implemented in one handset? In the VHF band, more than twenty "mobile broadcasting" channels can be deployed. It would be easy and fair to let twenty operators compete and let the market pick up the winner, which would buy the loser.